Islamabad June 18 2025: Pakistan approved largest financial agreement in the histroy of the country with commercial banks to eliminate circular debt in the power sector.
‘Alhamdulillah, today, the federal cabinet of Pakistan, led by Prime Minister Muhammad Shahbaz Sharif, approved the largest financial agreement in the country’s history of PKR 1,275 billion with commercial banks to eliminate circular debt in the power sector on the summary of the Power Division” says Minister for Power Awais Leghari.
“This step will play an important role in stabilizing the power sector and reducing the burden on the economy. For the first time, instead of maintaining the stock of circular debt at one level, work has been started to gradually eliminate it. That too at an interest rate of 0.9% less than KIBOR (this is a very low rate, which is being used for the first time),” Leghari added.
Repayment period of this loan will be made in 6 years in 24 installments.
There will be no additional burden on the budget on the government.
Benefits of this decision:
- The debt (circular debt) of the power sector will be reduced.
- Power companies (IPPs) will get their money, which will improve power generation.
- The confidence of banks and investors will increase.
- The power crisis will decrease in the coming years.
This decision is a major achievement for Pakistan’s economy and power sector, which will help lead the country towards a stable future.
